SodaStream Wants a Revolution

SodaStream (Nasdaq: SODA  ) isn't resting on its fizzy laurels.

The company behind the popular home-based soda makers is launching a new appliance that makes the process of transforming still water into sparkling even easier.

The new Revolution machine does away with the manual controls of the SodaStream machines that are already on the market. Yes, that means that the soda maker is its first electrically powered gadget. That may take away the portability of the original, but buyers are getting some cool perks:

  • Instead of mastering the art or science behind the right amount of carbonation, Revolution has four different settings. A simple push of a button fizzes up the water.
  • Current models find thirsty users twisting in their bottles of water for carbonation. Revolution bottles snap right on to the nozzle.
  • An LED screen animates the carbonation process in progress but -- more importantly -- shows the level of CO2 still left in the replaceable carbonator.

Revolution will hit retailers during the fourth quarter in time for this year's critical holiday shopping season. It will retail for "under" $200, or roughly twice the price of the entry-level model but not that much more than its fancier starter kits.

SodaStream is coming off a more than decent holiday quarter. Revenue climbed 32% to $85.7 million, and adjusted earnings rose 21% to $6.7 million. Some investors were concerned that starter systems weren't growing as quickly as the consumables (carbonator refills and soda flavors), but new sales through the Revolution will help.

The new electric appliance is just one more reason to expect SodaStream to close out 2012 in better shape than when it started. New flavors sweetened by the all-natural plant-based stevia and Kraft Foods' (NYSE: KFT  ) Country Time and Crystal Light flavors will hit the market this summer.

There also aren't the fears that what happened to fellow beverage maker Green Mountain Coffee Roasters (Nasdaq: GMCR  ) late last week -- where its stock got slammed after Starbucks (Nasdaq: SBUX  ) announced that it would be putting out a high-end single-serve coffeemaker -- will happen here.

Do you think the soda giants would threaten their network of regional bottling partners by entering and thereby validating the niche home-brew market for soda? Of course not.

Revolution may be a hit. It may also be a dud. After all, it still leaves out one of the messier aspects of the SodaStream creation process -- adding the flavored syrup that can always bubble over if the water is too cold or the bottle isn't held just right. However, Revolution won't be replacing any of the existing models. We're talking about more shelf space, slightly improved convenience, and incremental sales.

There's nothing flat about that.

Drink up
Both Green Mountain and SodaStream have been dynamic recommendations to Rule Breakers subscribers, but now is a great time to discover the next rule-breaking multibagger that the newsletter has unearthed. It's a free report. Want it? Get it.

The Motley Fool owns shares of Starbucks. Motley Fool newsletter services have recommended buying shares of Starbucks, SodaStream International, and Green Mountain Coffee Roasters. Motley Fool newsletter services have also recommended writing covered calls on Starbucks and creating a lurking gator position in Green Mountain Coffee Roasters. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Longtime Fool contributor Rick Munarriz calls them as he sees them. He does not own shares in any of the stocks in this story, except for Green Mountain. Rick is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early.


Read/Post Comments (2) | Recommend This Article (8)

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Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On March 14, 2012, at 4:37 AM, TurbulentTime wrote:

    Once Pepsiso or/and Coca-Cola announce that they will make their own soda machines, watch the show on stage when SodaStream make a free fall from the wire.

    The way I see it, both big P and big C are monitoring the momentum of self-made soda machines by SodaStream. Once the trend and momentum are here to stay, both big P and big C will start making their own machines.

    And, you've got it right that it is same fate as GreenMountainCoffeeRoasters.

  • Report this Comment On October 10, 2012, at 2:26 AM, haysdb wrote:

    I don't see Coke or Pepsi entering this market. The market they're in, selling bottles and cans of sugar water, is just stupidly lucrative.

    I don't even think of my SodaStream as a soda machine. In fact, I have used it nearly every day for two years and never once made a soda. For me it's just a twist of lime or a dash of grapefruit juice. Heathy, cost-effective, and delicious.

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